UK IT market braced for 'erosion in business confidence' and price increases following Brexit - PC Retail

UK IT market braced for 'erosion in business confidence' and price increases following Brexit

Gartner has revealed its latest IT spending outlook
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Gartner has published a revised IT spending outlook following the UK's decision to leave the EU.

The analyst now expects worldwide IT spending to be flat in 2016, totalling $3.41 trillion. This is up from last quarter's forecast of negative 0.5 per cent growth.

The change in the forecast is mainly due to currency fluctuations.

"The current Gartner Worldwide IT Spending Forecast assumes that the UK would not exit the European Union. With the UK's exit, there will likely be an erosion in business confidence and price increases which will impact UK, Western Europe and worldwide IT spending," said John-David Lovelock, research vice president at Gartner.

Gartner says the leave vote will quickly affect IT spending in the UK and in Europe while other changes will take longer.

It says that staff may be the largest immediate issue, with the long-term uncertainty in work status making the UK 'less attractive' to new foreign workers. Retaining current non-UK staff and having less access to qualified new hires from abroad will impair UK IT departments, the analyst predicts.

Looking more globally, Gartner believes the lacklustre economic issues surrounding Russia, Japan and Brazil will hold back demand and worldwide PC recovery in 2016. Additionally, Windows 10 upgrades have further led to PC buying being delayed - consumers are willing to use older PCs longer, once they are upgraded to Windows 10.

Lovelock added: "2016 marked the start of an amazing dichotomy. The pace of change in IT will never again be as slow as it is now, but global IT spending growth is best described as lackluster.

"2016 is the year that business focus turns to digital business, the Internet of Things and even algorithmic business. To fund these new initiatives, many businesses are turning to cost optimisation efforts centering around the new digital alternatives (for example, SaaS instead of software licenses, voice over LTE [VoLTE] instead of cellular and digital personal assistants instead of people) to save money, simplify operations and speed time to value.

"It is precisely this new breadth of alternatives to traditional IT that will fundamentally reshape what is bought, who buys it and how much will be spent." 

Worldwide IT spending forecast: 2015 vs 2016 (in billions of US dollars)

 

2015 Spending

2015 Growth

2016 Spending

2016 Growth

Data Centre Systems

171,213

2.9%

174,578

2.0%

Software

313,948

1.1%

332,207

5.8%

Devices

662,295

-4.6%

627,235

-5.3%

IT Services

865,818

-3.4%

897,634

3.7%

Communications Services

1,400,049

-9.2%

1,380,782

-1.4%

Overall IT

3,413,324

-5.5%

3,412,436

0.0%

IT spending in 2016 - by category

  • Data centre systems' spending is projected to reach $174 billion in 2016, a two per cent increase from 2015.
  • Global enterprise software spending is on pace to total $332 billion, a 5.8 per cent increase from 2015.
  • Devices spending is projected to total $627 billion by the end of 2016
  • Spending in the IT services market is expected to increase 3.7 per cent, totalling $898 billion
  • Communications services spending is projected to total $1.38 trillion in 2016, down 1.4 per cent from 2015

Gartner's IT spending forecast methodology relies on analysis of sales by thousands of vendors across the range of IT products and services. 

The most recent quarterly IT spending forecast research is available at http://www.gartner.com/technology/research/it-spending-forecast/.

Image source: Free Images/Silviu Cozma

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